The monthly economic news this week was sparse. Consumer confidence rose to a 5 year high. The expectations component of this is an element of the LEI. The ISM services index showed slightly less expansion. Manufacturing inventories increased slightly. Consumer credit expanded less.
Many of the high frequency weekly indicators this past week were affected by Hurricane Sandy, so they must be treated with lots of scepticism. After one more week, the influence of the hurricane should pass.
Same Store Sales and Gallup consumer spending varied from weakly positive to substantially negative, although Gallup is almost certainly due to the hurricane:
The ICSC reported that same store sales for the week ending October 26 fell -0.2% w/w and were up +1.4% YoY. Johnson Redbook reported a very weak 0.8% YoY gain. Johnson Redbook has consistently been lower than the other series for consumer spending. The 14 day average of Gallup daily consumer spending as of November 8 was $65, compared with $71 last year for this period. This is the worst showing in a long time for Gallup, and would probably have been poor anyway, but Hurricane Sandy almost certainly impacted this number.
Bond yields were mixed and credit spreads remained close to their recent lows:
Weekly BAA commercial bond yields declined -0.05% this week to 4.49%. Yields on 10 year treasury bonds fell -0.07% to 1.74%. The credit spread between the two increased by 0.01% to 2.75%, just off its 15 month low. This remains an excellent trend, as it demonstrates a lack of fear of corporate default.
Housing reports were generally positive although weakly so:
The Mortgage Bankers’ Association reported that the seasonally adjusted Purchase Index fell -5% from the prior week, but is still up 3% YoY. These remain in the upper part of their 2+ year range. The Refinance Index also fell -5% for the week, retreating further from recent multi-year highs.
The Federal Reserve Bank’s weekly H8 report of real estate loans this week rose by 3 to 3531, or +0.1%. The YoY comparison, however, fell slightly to +1.3%, and is also 1.5% above its bottom.
YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker increased +1.2% from a year ago. YoY asking prices have been positive for over 11 months, although this is the weakest YoY comparison in many months.
Money supply remains generally positive:
M1 was up +0.5% for the week, and increased +3.5% month over month. Its YoY growth rate declined slightly to +13.7%. As a result, Real M1 also declined to +11.7% YoY. M2 was up +0.4% for the week, and was up 0.8% month over month. Its YoY growth rate increased slightly to 7.3%, so Real M2 also rose slightly to 5.3%. The growth rate for real money supply is still quite positive.
Employment related indicators were neutral to positive:
The Department of labour reported that Initial jobless claims declined 8000 to 355,000 from last week’s unrevised 363,000. The four week average rose by 3250 to 370,500, 2% above its post-recession low.
The American Staffing Association Index was again level at 95, the same level at which has been for about 2 months. The sideways trend in this index is similar to last year.
The Daily Treasury Statement showed that for the first 6 days of November, $42.5 B was collected vs. $ 40.6 B a year ago, a $1.9 B or increase. For the last 20 days ending on Thursday, $133.5 B was collected vs. $128.8 B for the comparable period in 2011, a gain of $4.7 B or +3.6%. This is towards the weak end 20 day YoY comparisons.
Rail traffic remained negative YoY, but still due to coal, while the diffusion index decreased considerably:
The American Association of Railroads reported that total rail traffic was down -34,900 carloads YoY, or -6.5%. Non-intermodal rail carloads were again off a large -6.8% YoY or -20,200, once again entirely due to coal hauling which was off -21,300. Excluding coal, carloads were up 1100, but it is possible this was affected by preparations for the anticipated landfalling hurricane in the northeast. Negative comparisons remained even at 11 types of carloads. Intermodal traffic was down -14,500 or -6.3% YoY.
Finally, the price of oil rose while gasoline fell, and gasoline usage was mixed:
Gasoline prices fell another $.08 last week to $3.49. This is nevertheless still quite high for this time of year. Oil prices per barrel increased from $84.86 to $86.07. Gasoline usage for one week was 8307 M gallons vs. 8671 M a year ago, down -4.2%. The 4 week average at 8593 M vs. 8572 M one year ago, was actually up 0.2% YoY.
Turning now to the high frequency indicators for the global economy:
The TED spread remained just above its 52 week low, 0.22. The one month LIBOR also remained at its new 52 week low of 0.2090. Both are well below their 2010 peaks.
The Baltic Dry Index fell from 986 to 940, well above its recent 52 week low of 662. The longer term declining trend in shipping rates for the last 3 years remains. The Harpex Shipping Index fell by 4 to 367, another new 52 week low.
Finally, the JoC ECRI industrial commodities index rose from 118.21 to 118.99. It turned slightly positive, up +0.10.
Housing, money supply, bank overnight rates, and corporate yields and credit spreads all remained very positive. Jobless claims were neutral and. Gas prices are for now a positive. Other commodities are neutral.
Meanwhile rail carloads, shipping rates, and gas usage remain generally negative and continue to the contrast between transportation and other indicators.
Too many series were affected by Hurricane Sandy to read much into this week’s data. The effects should begin to recede next week. Have a nice weekend.
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